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World Energy Outlook 2020 World Energy Outlook 2020 www.iea.org/weo INTERNATIONAL ENERGY AGENCY The IEA examines IEA member IEA the full spectrum countries: association of energy issues countries: including oil, gas and coal supply and Australia demand, renewable Austria Brazil energy technologies, Belgium China electricity markets, Canada India energy efficiency, access to energy, Czech Republic Indonesia demand side Denmark Morocco management and Estonia Singapore much more. Through Finland South Africa its work, the IEA advocates policies France Thailand that will enhance Germany the reliability, Greece affordability and Hungary sustainability of energy in its 30 Ireland member countries, Italy 8 association Japan countries and Korea beyond. Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal Slovak Republic Spain Sweden Switzerland Turkey United Kingdom United States Please note that this publication is subject to specific restrictions that limit its use and distribution. The The European terms and conditions are Commission also available online at www.iea.org/t&c/ participates in the Source: IEA. All rights work of the IEA reserved. International Energy Agency Website: www.iea.org Classic Page 1.indd 1 21-10-2019 10:53:41 Classic Page 1_A4.indd 1 21-10-2019 10:55:38 Foreword This has been an extraordinarily turbulent year for the global energy system. Covid-19 unleashed a crisis of exceptional ferocity on countries around the world, with severe impacts on lives and livelihoods. The crisis is still unfolding today – and its consequences for the world’s energy future remain highly uncertain. The International Energy Agency (IEA) responded quickly and assertively to the pandemic, refocusing our work to assess the impacts of the crisis across all the key fuels and technologies. We enabled governments, companies and citizens to better understand the emerging trends, such as the unparalleled plunge in global energy investment and its consequences. We offered practical policy advice, most notably in the WEO Special Report on Sustainable Recovery, which shows how governments – by implementing targeted energy policies – can boost economic growth, create jobs and put global emissions into decline over the next three years. Following that, we drew on the IEA’s ever-growing convening power to bring together 40 Ministers from countries representing over 80% of the global economy at the IEA Clean Energy Transitions Summit on 9 July 2020, where they discussed the importance of a clean and resilient recovery. The work of the IEA remains centred on the range of energy challenges the world faces today – and on how the pandemic is affecting them. We are contending with old and new threats, both to the energy supplies that economies and societies rely on today – and to the all-important clean energy transitions that will shape their future. Our flagship publication, the World Energy Outlook (WEO), is no exception. This year’s WEO has adapted to the pandemic’s disruption in three key ways. First, Covid-19 has introduced huge near-term uncertainty about the future of energy, so WEO-2020 focuses much more than its predecessors on the next 10 years. We are entering a critical decade for accelerating clean energy transitions and putting emissions into structural decline. Second, a key question is the future severity of the pandemic and its economic implications. In response, we have introduced a new scenario, the Delayed Recovery Scenario, to explore this and consider the different outcomes, depending on whether the world gets the pandemic under control in 2021 or it turns into a more prolonged crisis and a deeper economic slump. This has huge implications for the energy sector, especially in the developing world. A delayed economic recovery results in slower emissions growth, but it is not an answer to climate change. Our analysis makes it clear that the somewhat lower emissions come for all the wrong reasons and at huge economic and social costs. Third, the rising number of countries and companies committing to net-zero emissions is a profoundly important development. All the pledges announced so far are in line with the vision mapped out in our Sustainable Development Scenario, in which countries achieving net-zero emissions by 2050 spur the world as a whole to reach it by 2070. But when I sat Tdiomw Gn oautl dt,h we eb aeggrinenedin igt wofa st htiism yee taor dweietphe tnh aen lde aedx teanudth ooursr aonf atlhysei sW oEf One, tL-zaeurroa eCmoziszsii oannsd. All rights reserved. Foreword 3 A. E I That is why we have a new case in this WEO: the Net Zero Emissions by 2050 case, which examines what it would take to get the entire world to net zero by mid-century. How the world rises to these challenges will define our energy future and determine the success or failure of efforts to tackle climate change. The IEA has made its own position clear. Since the scale of the Covid-19 crisis began to emerge, we have been leading the calls to put clean energy at the heart of the economic response to ensure a secure and sustainable recovery. Today, we are seeing optimistic signs that clean energy transitions are gaining momentum. In this WEO, we highlight the enormously consequential nature of the choices and responsibilities facing decision makers. The massive sums of money they are committing to spur economic recovery are a historic opportunity to significantly accelerate transitions towards a cleaner and more resilient energy future. This is the moment for ambitious action. As this WEO makes clear, decisions taken now will echo down through generations to come. I would like to conclude by noting that the essential insights contained in this publication are the result of a tremendous amount of painstaking number crunching, shrewd analysis and commendable hard work from the entire WEO team. I would like to thank all of those colleagues, under the exemplary leadership of Laura and Tim, for their dedicated efforts. Dr. Fatih Birol Executive Director International Energy Agency All rights reserved. 4 World Energy Outlook 2020 A. E I Acknowledgements This study was prepared by the World Energy Outlook (WEO) team in the Directorate of Sustainability, Technology and Outlooks (STO) in co-operation with other directorates and offices of the International Energy Agency. The study was designed and directed by Laura Cozzi, Chief Energy Modeller and Head of Division for Energy Demand Outlook, and Tim Gould, Head of Division for Energy Supply and Investment Outlooks. Stéphanie Bouckaert led on end-use modelling and analysis. Daniel Crow co-led the climate and environment analysis and led the behaviour analysis. Tae-Yoon Kim co-led the fuel supply analysis. Christophe McGlade co-led the climate and environment analysis, and the analysis of fuel supply. Paweł Olejarnik co-ordinated the oil, natural gas and coal supply modelling. Brent Wanner led the power sector modelling and analysis. Daniel Wetzel co- led the energy demand analysis. Key contributions from across the WEO team were from: Zakia Adam (lead on data management, contributed to fossil fuel subsidies), Lucila Arboleya Sarazola (investment and finance), Yasmine Arsalane (lead economic outlook, power), Simon Bennett (energy technology), Arthur Contejean (lead on energy access and developing countries), Davide D'Ambrosio (lead on data science, power), Amrita Dasgupta (energy access, climate and environment), Thibault Deletombe (industry), John Connor Donovan (power and data management), Musa Erdogan (industry and data management), Eric Fabozzi (power and electricity networks), Pablo Gonzalez (investment and finance), Timothy Goodson (lead on buildings and demand-side response), Paul Hugues (industry and transport), Vanessa Koh (power and energy storage), Lilly Yejin Lee (transport and aviation), Kieran McNamara (electricity networks and nuclear), Laura Maiolo (oil and gas supply), Ariane Millot (buildings, climate and environment), Toru Muta (fuel supply), Yoko Nobuoka (investment, coal), Sebastian Papapanagiotou (electricity networks and power), Claudia Pavarini (lead on energy storage, power), Daniele Perugia (financing of solar PV and electricity networks), Apostolos Petropoulos (lead on transport, climate and environment), Ryszard Pospiech (supply modelling and data management), Arnaud Rouget (energy access and Africa), Jasmine Samantar (energy access and Africa), Andreas Schroeder (lead on industry), Rebecca Schulz (oil and gas supply), Leonie Staas (climate and environment), Michael Waldron (lead on investment), Molly A. Walton (fuel supply), Peter Zeniewski (lead on natural gas). Teresa Coon, Marina Dos Santos and Eleni Tsoukala provided essential support. Edmund Hosker carried editorial responsibility. Debra Justus was the copy-editor. Colleagues from the Energy Technology Policy (ETP) Division led by Timur Gül provided valuable help on demand modelling and analysis, with overall guidance from Araceli Fernandez Pales. Peter Levi, Hana Mandova and Tiffany Vass contributed to the analysis on industry; Leonardo Paoli, Jacopo Tattini and Jacob Teter contributed to the analysis on tJorasnes pBoerrtm; uTdheibza uMt eAnbeenrdgeezl aanndd CUhwiaera R Deemlmmaes tcroon ctorinbturitbeudt etdo ttoh et haen aanlyasliyss ios no np obwuieldr inagnsd; All rights reserved. Acknowledgements 5 A. E I hydrogen. Other key contributors from across the agency were: Laszlo Varro, Carlos Fernández Alvarez, Heymi Bahar, Tomas De Oliveira Bredariol and Inchan Hwang. Mechthild Wörsdörfer, Director of STO, provided encouragement and support throughout the project. Valuable comments and feedback were provided by other senior management and numerous other colleagues within the IEA. In particular, David Turk, Keisuke Sadamori, Amos Bromhead, Alessandro Blasi, Nick Johnstone, Neil Atkinson, Joel Couse, Peter Fraser, Paolo Frankl, Tom Howes, Brian Motherway, Aad van Bohemen, Rebecca Gaghen, Masatoshi Sugiura, Christophe Barret, Toril Bosoni and Jean-Baptiste Dubreuil. Thanks go to the IEA’s Communication and Digitalisation Office for their help in producing the report and website materials, particularly to Jad Mouawad, Jethro Mullen, Astrid Dumond, Jon Custer, Christopher Gully, Katie Lazaro, Julie Puech, Magdalena Sanocka, Rob Stone and Therese Walsh. Diana Browne, Ivo Letra and Ben McCulloch provided essential support to the production process. IEA’s Office of the Legal Counsel, Office of Management and Administration and Energy Data Centre provided assistance throughout the preparation of the report. The IEA is grateful for the guidance and valuable advice of Peter Betts on climate issues. Valuable input to the analysis was provided by: David Wilkinson (independent consultant); Markus Amann, Peter Rafaj, Gregor Kiesewetter, Wolfgang Schöpp, Chris Heyes, Zbigniew Klimont, Jens Borken-Kleefeld and Pallav Purohit (International Institute for Applied Systems Analysis); Elisa Puzzolo, Daniel Pope and Matthew Shupler (University of Liverpool). The work could not have been achieved without the support and co-operation provided by many government bodies, organisations and companies worldwide, notably: Enel; Energy Market Authority, Singapore; Eni; European Commission; Ministry of the Environment, Land and Sea, Italy; Ministry of Economy, Trade and Industry, Japan; The Research Institute of Innovative Technology for the Earth, Japan; and Toshiba. Activities within the IEA Clean Energy Technologies Programme provided valuable support to this report. Thanks also go to the IEA Energy Business Council, IEA Coal Industry Advisory Board, IEA Energy Efficiency Industry Advisory Board and the IEA Renewable Industry Advisory Board. Peer reviewers Many senior government officials and international experts provided input and reviewed preliminary drafts of the report. Their comments and suggestions were of great value. They include: Emmanuel Ackom UN Environment Programme (UNEP), Technical University of Denmark Partnership (DTU) Keigo Akimoto Tthhee ERaersteha, rJcahp aInns titute of Innovative Technology for All rights reserved. 6 World Energy Outlook 2020 A. E I Venkatachalam Anbumozhi Economic Research Institute for ASEAN and East Asia (ERIA) Peter Bach Danish Energy Agency Marco Baroni Independent consultant Paul Baruya Clean Coal Centre Tom Bastin UK Department for Business, Energy and Industrial Strategy Harmeet Bawa Hitachi ABB Power Grids Christian Besson Independent consultant Rina Bohle Zeller Vestas, Denmark Serge Braz EDF William Brent Power for All Mick Buffier Glencore Nick Butler Kings College London Guy Caruso Center for Strategic and International Studies (CSIS), United States Kimball Chen Global LPG Partnership Xavier Chen Statoil China Drew Clarke Australian Energy Market Operator Russel Conklin US Department of Energy Ian Cronshaw Independent consultant François Dassa EDF Ralf Dickel Oxford Institute for Energy Studies, United Kingdom Giles Dickson WindEurope Loic Douillet GE Power David Elzinga Asian Development Bank Simon Evans Carbon Brief Fridtjof Fossum Unander Research Council of Norway Jean-François Gagné Department of Natural Resources Canada Faith Gan Energy Market Authority, Singapore Karthik Ganesan Council on Energy, Environment and Water (CEEW) Dolf Gielen International Renewable Energy Agency (IRENA) Craig Glazer PJM Interconnection Andrii Gritsevskyi International Atomic Energy Agency (IAEA) Andrea Guerrero United Nations Michael Hackethal Federal Ministry for Economic Affairs and Energy, Germany James Henderson Oxford Institute for Energy Studies, United Kingdom Cameron Hepburn Oxford University, United Kingdom Masazumi Hirono Tokyo Gas Takashi Hongo Mitsui Global Strategic Studies Institute, Japan JNaona-Hh eKianu Jfemssaen JCOoSluCmOb Eina eUrngyiv Feirnsaitnyc, eU annitde dS tSrtaatteegsy Consultancy All rights reserved. Acknowledgements 7 A. E I Yoichi Kaya The Research Institute of Innovative Technology for the Earth, Japan Michael Kelly World LPG Association Robert Kleinberg Columbia University, United States Hidechika Koizumi Ministry of Economy, Trade and Industry, Japan Phoebe Koundouri Athens University of Economics and Business Ken Koyama Institute of Energy Economics, Japan Atsuhito Kurozumi Kyoto University of Foreign Studies Sarah Ladislaw Center for Strategic and International Studies (CSIS), United States Francisco Laveron Iberdrola Lee Levkowitz BHP Li Jiangtao State Grid Energy Research Institute, China Felix Chr. Matthes Öko-Institut – Institute for Applied Ecology, Germany Antonio Merino Garcia Repsol Cristobal Miller Department of Natural Resources, Canada Simone Mori Enel. Peter Morris Minerals Council of Australia Isabel Murray Department of Natural Resources, Canada Steve Nadel American Council for an Energy-Efficient Economy, United States Henri Paillere International Atomic Energy Agency (IAEA) Pak Yongduk Korea Energy Economics Institute (KEEI) Ignacio Perez Arriaga Comillas Pontifical University's Institute for Research in Technology, Spain Glen Peters CICERO Koen Peters GOGLA (Global association for the off-grid solar energy industry) Stephanie Pfeifer The Institutional Investors Group on Climate Change (IIGCC) Cedric Philibert French Institute of International Relations, Centre for Energy & Climate Dmitry Popov CRU Andreas Regnell Vattenfall Rasmus Nicolas Ringgaard Permanent Delegation of Denmark to the OECD Seth Roberts Saudi Aramco Vera Rodenhoff Federal Ministry of Environment, Nature Conservation and Nuclear Safety, Germany Hans-Wilhelm Schiffer World Energy Council Filip Schittecatte ExxonMobil Adnan Shihab Eldin Foundation for the Advancement of Sciences, Kuwait Adam Sieminski Kapsarc PStaeupl hSaimn oSninsg er YCalilme aUtne ivAecrtsioitny Network International All rights reserved. 8 World Energy Outlook 2020 A. E I Jim Skea Imperial College London John Staub US Energy Information Administration Ottavia Stella Eni Jonathan Stern Oxford Institute for Energy Studies, United Kingdom Wim Thomas Royal Dutch Shell Johannes Trüby Deloitte Nikos Tsafos Center for Strategic and International Studies (CSIS), United States Frank van der Vleuten Ministry of Foreign Affairs, The Netherlands Noé Van Hulst Ministry of Economic Affairs & Climate Policy, The Netherlands Tom Van Ierland DG Climate Action, European Commission Frank Verrastro Center for Strategic and International Studies (CSIS), United States David Victor UC San Diego School of Global Policy and Strategy, United States Akira Yabumoto J-Power William Zimmern BP Christian Zinglersen European Union Agency for the Cooperation of Energy Regulators (ACER) The individuals and organisations that contributed to this study are not responsible for any opinions or judgments it contains. All errors and omissions are solely the responsibility of the IEA. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. All rights reserved. Acknowledgements 9 A. E I
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